Three interesting issues were raised in this application. First, whether an adjudication decision made outside the statutory time limits is void. Secondly, whether the adjudicator who made the decision was entitled to his fees for the decision. Thirdly, whether the building contract was void because the contractor was not licenced to undertake some of the works contracted for. Ultimately, Dalton J found that both the adjudication decision and building contract were void, and the adjudicator was not entitled to his fees.
30 March 2020
The applicant engaged the first respondent to undertake earthworks, roadworks, the construction of some prefabricated sheds and the construction of a bus stop to replace an existing bus stop on land it was developing. –. A dispute arose regarding a $1.3 million progress payment for these works, which was referred to adjudication. . The purported adjudication decision under the Building Industry Fairness (Security of Payment) Act 2017 (“BIFA”) was delivered on 29 October 2019 in favour of the first respondent. . The applicant sought a declaration that the adjudication decision was void on two grounds:
1. The adjudication decision was delivered after the maximum prescribed period under the BIFA; and
2. The building contract was void because the first respondent was not appropriately licenced to undertake the works it contracted to undertake. .
Justice Dalton first considered the time period issue. Her Honour found that the claim was made within the time period prescribed in s 75(2) of BIFA. . Looking to the duties of the adjudicator, three sections were relevant. First, s 84(1), which provides that the adjudicator “must” make a decision “as quickly as possible”, subject to the time limits. . Secondly, s 85(1) provides that a decision “must” be made within 10 business days “after the response date” for a standard payment claim, and 15 business days for a complex payment claim. . Thirdly, s 86 confers upon the adjudicator a discretion to extend time. . If the adjudicator does not make a decision within the prescribed period, s 94 allows a claimant to request that the application be referred to a new adjudicator, or to make a new application. . Under s 95(6), an adjudicator is not entitled to be paid their fees if they fail to make a decision. . Under s 95(8), the adjudicator will still be entitled to be paid if their decision is declared void so long as “the adjudicator acted in good faith in adjudicating the application”. .
Against this background, Dalton J found that the adjudicator did not deliver his decision within the statutory time limit. . Accordingly, her Honour turned to the question of whether there was “legislative purpose that an adjudicator’s decision delivered outside the maximum time prescribed by the statute is void”. . It was of some importance that s 85(1) uses mandatory language and that in the BIFA there was a clear distinction between when “must” and “may” were used. –. Turning to the broader statutory scheme, her Honour found that the applicant’s argument was supported by s 94(2). . Further, the entire scheme imposes “a rapid extra-curial determination of disputes about progress claims”. . While the first respondent gained some support from the text of s 86(2)(b), which provides that time may be extended where the adjudication relates to a complex payment claim and the parties have failed to agree to extend time, Dalton J considered that this point was “overwhelmed” by the other textual considerations. –.
While there was interstate intermediate appellate authority on this question, Dalton J considered that it turned on the wording of the Victorian and New South Wales legislation and so was not binding. –. Ultimately, her Honour found that the adjudication decision was void because it was delivered outside the statutory time period. .
An ancillary question was whether the adjudicator was entitled to be paid his fees. Dalton J considered that it could not be said that the adjudicator acted in good faith because he was aware of the time limits and represented that a decision had been made within time, when it was not the case. . Accordingly, the fees were not payable by operation of s 95(8).
Although it was not necessary to reach a conclusion regarding whether the first respondent held the appropriate licence, Dalton J considered this point because it was fully argued. . Under s 42 of the Queensland Building and Construction Commission Act 1991, a person must not carry out building work unless they hold an appropriate licence, and if they nevertheless do so, they are not entitled to be paid for that work. . The first respondent held a “Builder restricted to structural landscaping licence”. . The question was whether this licence was appropriate. .
Significantly, only a minor part of the works which the first respondent was contracted to do were outside the terms of its licence: the construction of a bus stop shelter. –. The shed part of the shelter fell within an exemption within the licence. . However, her Honour considered that this did not cover a standalone bus seat and bike rack. . While there is a “busway” exemption, the seat and bike rack did not fall within this. -. It was also suggested that they would fall within a general “roads” exemption. . After considering the history of the road in question and the laws surrounding it, Dalton J found that most of the works were in respect of a road. –. However, her Honour disagreed that the bus seat and bike rack were, as they were on a footpath, which is expressly dealt with in the relevant regulations. –. Thus, a separate licence was required to build the seat and bike rack. .
While the first respondent was therefore only not licenced to undertake a small portion of the total works, Dalton J considered that this issue infected the entire contract such that the first respondent was precluded by s 42 from being paid for any of the work under it. .